[25.06 Grant Application] zkLoans

General
1

Description:

A protocol for uncollateralized lending harnessing cross-chain reputation.

Project Name:

zkLoans

Submission Date:

18 June 2025

Founder Name:

  • Luciano Leonel Carreño — Full Stack Developer & Lawyer. 4 years of experience in full stack and Rust development, focused on privacy and zk-proofs.

  • Fabián Edwin Díaz Viera — Blockchain Developer. 3 years of experience in blockchain projects and full stack development, focuses on Solidity development.

Award Amount:

500,000 RIF

Project Stage: MVP on Testnet

  • Smart contracts deployed on Rootstock Testnet: lending and scoring contracts are live in a testnet environment.

  • VLayer and LayerZero integration validated: email Proofs, Time Travel and Teleport proofs tested; omnichain messaging to Ethereum Sepolia scoring contract confirmed.

  • Backend operational: basic NestJS service receives and stores loan requests and signed legal agreements.

  • Frontend functional: Next.js DApp where users can simulate loan request and disbursement flows against testnet contracts.

Sector:

DeFi / Lending / Financial Inclusion

Links to Demo and Full Proposal:

Description

zkLoans is a decentralized, collateral-free lending protocol on Rootstock that builds cross-chain reputation using zk-proofs. The protocol combines:

  • Off-chain zk-proofs: email proofs via vLayer to verify financial data (e.g., bank summary) while preserving user privacy.

  • On-chain zk-proofs: time travel proofs for historical balances and Teleport proofs for multi-chain liquidity via vLayer.

  • Cross-chain reputation scoring: aggregates all proofs into a reputation score on a Rootstock scoring contract, with data relayed via LayerZero.

  • Off-chain KYC with on-chain attestation: users complete KYC off-chain; the signed legal agreement’s hash and signature are stored on-chain, while the full document remains securely off-chain.

  • Rootstock smart contracts: upon credit approval, these contracts disburse RBTC loans and manage repayment tracking.

  • On-chain recording: attestations and repayment status are recorded on-chain, enabling reputational penalties for defaults.

  • Secure off-chain storage: legal documents are stored off-chain and referenced on-chain by their hashes.

Value to the Rootstock ecosystem:

  • Demonstrates an advanced DeFi use case on Bitcoin via Rootstock.

  • Increases staking demand for RIF and on-chain activity.

  • Showcases integration of zk-proofs and omnichain messaging (vLayer, LayerZero).

  • Potential for financial inclusion by offering loans without traditional collateral.

Mission

Enable individuals and small businesses to access collateral-free microloans through a decentralized Rootstock protocol that leverages zk-proofs and cross-chain reputation, ensuring privacy, security, and legal compliance.

Product

  • Key features:

    • Off-chain data verification with zk-proofs (Email Proofs via VLayer).

    • On-chain proofs (Time Travel, Teleport) for assessing solvency and liquidity across chains.

    • Cross-chain reputation scoring computed and stored on Rootstock, but available cross-chain via LayerZero messaging.

    • Off-chain KYC with on-chain attestation of legal agreement hash/signature.

    • Rootstock smart contracts to disburse RBTC and handle repayments.

    • Secure off-chain storage for signed legal agreements, referenced by on-chain hashes.

  • Ecosystem synergy:

    • Drives transaction volume and fees on Rootstock.

    • Encourages RIF staking by showcasing a novel DeFi protocol.

    • Builds on vLayer and LayerZero integrations, potentially benefiting related projects.

Traction

  • Hackathon win: zkLoans won first prize in the “Everyday DeFi” track at ETH Global Prague on 01 June 2025.

  • Presented the project on the Bitcoin Builders Call on June 10.

Roadmap

Month 0–1: Planning & Research

  • Design the KYC data storage system using Aztec’s private chain (leveraging our identity SDK). All user data (including KYC information and financial summaries) remains fully private and encrypted. Nothing is made public unless the user defaults on the loan. This privacy-by-default approach will be our core differentiator.

  • Decide on bridging method: Using LayerZero from Base.

  • Evaluate and test bank data extraction tools (VLayer Email Proofs, zkEmail, or others), and explore VLayer Web Proofs to directly verify user liquidity from their browser session.

  • Set up manual fallback for early-stage data review.

  • Outline legal strategy for handling user defaults with legal advisors (e.g., Aleph).

Month 1–2: Core Prototyping

  • Build prototype for storing agreement + KYC on Aztec.

  • Test bridging proofs/messages to a Rootstock test stub.

  • Prototype and benchmark financial data extraction pipeline.

  • Draft legal agreement with embedded attestation logic.

  • Conduct early security and privacy review.

Month 2–3: End-to-End Integration

  • Implement complete backend flow: KYC → Aztec → bridge → Rootstock.

  • Finalize chosen extraction tool + fallback.

  • Validate legal agreement + on-chain attestation system.

  • Run test cases simulating real users and data paths.

  • Explore optional liquidity pool design for later stage.

Month 3–4: Pilot Testing

  • Run closed pilot with selected users.

  • Collect feedback on UX, trust, and privacy perception.

  • Refine flows and finalize compliance checks.

  • Decide whether to prototype lender-borrower pool or postpone.

Month 4–5: Mainnet Readiness

  • Complete security audit and privacy validation.

  • Confirm legal framework for public launch.

  • Prepare user onboarding flows and documentation.

  • Launch to mainnet and prepare the next stage.

Conclusion

zkLoans offers an innovative DeFi solution on Rootstock: collateral-free loans powered by zk-based cross-chain reputation, integrating VLayer and LayerZero. It drives technical innovation, promotes financial inclusion, and increases RIF staking and on-chain activity. We invite the community to review, provide feedback, and vote Yes to advance DeFi on Bitcoin and showcase Rootstock’s potential in real-world microloans without collateral.

4 Likes
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Pretty interesting project!

3 Likes
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I like this. We need more uncollateralized lending protocols.

2 Likes
4

@lucholeonel This is interesting. As the DeFi landscape continues to evolve, we want to understand your competitive position. While there might be projects touching on aspects related to what you are doing, and to better understand the competitive landscape, how many projects are you actively competing with? Could you explicitly detail what truly makes zkLoans unique, and how this establishes a clear and sustainable competitive advantage against both existing and emerging competitors in this growing space? We’re keen to understand what truly sets it apart.

2 Likes
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We looked at other projects and found three that are close, but none do what zkLoans is doing.

TrueFi gives uncollateralized loans, but only for big companies. It uses off-chain systems and complex legal contracts, so it’s not made for individual users.

zkLend uses zk proofs to create credit scores, but they don’t offer uncollateralized loans. And it’s also made for institutions.

3Jane gives uncollateralized loans using zk proofs, but only for U.S. citizens, and the loans are big, not for everyday people.

zkLoans is different. We give uncollateralized loans to individual users, using zk proofs to keep their privacy. If the person doesn’t pay, we can reveal their identity and start legal action.

We didn’t base our project on any of these, but zkLoans has the best parts of the three: lending without collateral, modular zk proofs, and access for real users. We also use on-chain and off-chain proofs, so it works well in different situations.